Microsoft upped the stakes this weekend when it offered up a hefty prize if you were able to “smoke” a Windows Phone. What started out as a direct-to-consumer, light-hearted campaign, has quickly turned sour as one individual was able to successfully capture the Internet’s attention after he claims he won a challenge, but then was denied the prize “just because”, according to Sahas Katta blog (via Reddit)

The challenge was to pull up the weather from two different cities. After doing a power cycle on the device (Samsung Galaxy Nexus running Android 4.0) Sahas felt like he had struck gold because he already had two weather widgets on his home screen. When the challenge kicked off, he narrowly beat the Microsoft store employee even though they had two weather locations pinned to their start screen.

The Microsoft Store employee I was up against then explained the selected challenge. Her exact words were the following: “bring up the weather of two different cities.” The one who could do that first would win. I felt like I struck gold since I knew I already had two weather widgets on my home screen: one for my current location (San Jose, CA) and another for Berkeley, CA.

After defeating the store employee, he was quickly told he had not won. Sahas states he pushed for a real answer but was never given a firm response. When another employee came over to investigate (possibly a store manager), he was told that he lost because the cities were not in two different states. The reason for the loss was clearly not relevant as Sahas claimed that was not part of the initial challenge.

Now, taking a step back, this is only one side of the story and as typical with these types of incidents, the Internet caught this like the flu and Microsoft will surely have to respond to keep the ‘smoked by Windows Phone’ campaign from being soured by this incident.

To go further, Neowin has known at least one individual who did beat a Windows Phone in the challenge at CES and Microsoft did pay up on the spot. What has most likely happened, is that what was once a well orchestrated promotion has been spoiled when it left the confines of the individual who created it.

Microsoft’s BenthePCguy has already responded to the complaint but was simply offering the individual a rematch. Of course, Ben cannot blindly admit defeat based on what has been posted on the Internet, but when a prize of over $1000.00 is on the line, Sahas was most likely not looking for a rematch.

How Microsoft will move forward with the ‘Smoked by Windows Phone’ is looking a bit more uncertain, but if more allegations like the one above start hitting the web, it could be disastrous for the marketing campaign.

We also have a discussion in our forums about the whole incident which you can read here.

Update: BenthePCguy has just made a post on his Twitter account and is looking to make the situation right and has offered up a laptop and a new Windows Phone to Sahas.